Rachel Reeves speech live: Chancellor refuses to rule out hiking income tax, VAT or National Insurance in Budget

The Independent’s Whitehall Editor Kate Devlin reports:

The chancellor today refused to rule out breaking her manifesto pledges on tax – to not raise VAT, national insurance or income tax.

She was repeating what the prime minister did at PMQs last week – failing to stick to a key promise Labour made to the public at the general election just last year.

Indeed, she was even asked “is it fair to put up income tax, as you probably will, when you can’t get the welfare bill down” – an assertion she did not knock down.

In reality her speech was designed to highlight to the public that tax rises are coming.

The nation’s finances are in such a state that they will have to.

Ms Reeves’ speech today was about trying to ensure who gets the blame for that – as she pointed the finger at her predecessors.

But Labour now faces two key tests of faith with the electorate. Not just raising taxes, but also, crucially, breaking their promises not to.

The Independent’s Business and Money Editor Karl Matchett reports:

Government borrowing costs have fell as Rachel Reeves delivered her pre-Budget speech.

The 10-year gilt yield slid six basis points to 4.38 per cent, while the 30-year yield fell to its lowest level since April.

The gilt yield matters – in particular to the government right now – in two ways.

Firstly, it’s the most important sign of the money markets trusting her moves, or at least that she’ll do what she’s saying she will.

Remember the Liz Truss debacle? The gilt yield on 30-year bonds shot more than 1 percentage point higher in the aftermath.

Secondly and more practically speaking, it’s the cost of borrowing money for the government.

The higher the yield is, the more interest is payable on the debt – which, as Ms Reeves has noted, is extremely high.

Rachel Reeves has refused to rule out hiking income tax, VAT or National Insurance to plug a hole in the public finances in a major pre-Budget speech.

The chancellor has hinted she will take painful decisions later this month as she said “easy answers” to fix economic issues would be “irresponsible”.

When asked whether she would raise taxes for working people, she said: “I will set out the individual policies of the budget on the 26th of November. That’s not what today is about. Today is about setting the context up for that budget.”

The Independent’s Whitehall Editor Kate Devlin reports:

The chancellor refused to be drawn after last week’s row over her failure to get the correct licence to rent out her south London property.

She pointed to the judgement of the PM’s ethic adviser last week and added “I don’t have anything more to say on that”.

She was thrown a lifeline when her estate agent issued a statement admitting a mistake and apologising.

An email from Harvey & Wheeler to Ms Reeves’s husband appeared to show the firm had offered to obtain the licence on their behalf.

But reports at the weekend suggested she had been warned of the need for a licence by a second estate agency.

The pound has fallen as Rachel Reeves gives an unusual pre-Budget speech adding fuel to speculation she will hike taxes.

Sterling dropped 0.3 per cent to $1.3100 as government bonds gained, Bloomberg reported.

It said the 10-year gilt yield slid six basis points to 4.38 per cent, while the 30-year yield fell to its lowest level since April.

The Independent’s Whitehall Editor Kate Devlin reports:

The chancellor has launched a blistering attack on everyone from David Cameron to Nigel Farage as she attempted to distance herself from the UK’s faltering economy.

She said that any chancellor from any party in her position would be facing the tough choices she is in this Budget.

She attacked Cameron and Osborne’s austerity policy at the start of the last decade saying that it “dealt a hammer blow to our economy”.

Subsequent Tory governments were responsible for instability and indecision, which saw “hard decisions put off again and again”.

That was compounded by a “rushed and ill thought through Brexit” which meant when the pandemic arrived the UK was “under prepared” she said.

She also took a barely concealed swipe at current Tory leader Kemi Badenoch and Nigel Farage when she attacked those she claimed just wanted “easy answers”.

But, despite the chancellor’s argument, Labour’s woeful poll ratings suggest it is not at all clear that after more than a year in power the public blames her predecessors and not her for the state of the economy.

Chancellor Rachel Reeves said despite the UK’s “considerable economic strengths” it had been hit by a series of global challenges and persistent problems with productivity.

In a speech setting out the challenges she will face in her Budget later this month, she said “the world has thrown even more challenges our way” in the last 12 months.

“The continual threat of tariffs has dragged on global confidence, deterring business investment and dampening growth,” she told reporters in Downing Street.

“Inflation has been too slow to come down, as supply chains continue to be volatile, meaning the costs of everyday essentials remain too high.

“And the cost of government borrowing has increased around the world, a shift that Britain, with our high levels of debt left by the previous government, has been particularly exposed to.”

The Independent’s political correspondent Millie Cooke reports:

Rachel Reeves is now taking the fight to her opponents, Reform UK and the Tories, saying they would repeat the “mistakes of the past which would only take us backwards”.

The chancellor promised to strive for “more productive and more efficient public services”, hitting out at Reform’s running of local authorities.

“My opponents will tell you that they could do more. Reform, who have promised savings from our public services, and yet, in Kent County Council and councils they run across Britain, apparently they can’t find a single penny, and instead are going to increase council tax for more than 2 million people”, she said.

Hitting out at the Tories, she added: “They oversaw rising welfare costs and a growing civil service. What were they doing for 14 years?”

And pointing to the party’s promise of £47bn pounds of cuts, the chancellor said: “Let us be clear, there is no way that cuts on that scale, equivalent to cutting our entire armed forces or cutting every single police officer in the country twice over could be delivered without devastating consequences for our public services.”

In an unusual move, the chancellor has acknowledged speculation about what could be in her upcoming Budget.

She said during the speech in Downing Street on Tuesday morning: “There is a lot of speculation about the choices I will make. I understand that – these are important choices that will shape the future of our country for years to come.

“I want people to understand the circumstances we are facing, the principles guiding my choices – and why I believe they will be the right choices for the country.”